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| Fed Speakers and Auction Help Bonds Hold Steady | Thu, 10 Jul 2025 21:07:13 GMT
| | Fed Speakers and Auction Help Bonds Hold Steady
Bonds technically lost a small amount of ground today, but it's just as fair to say that they're holding steady on the week. In fact, closing yields today were right in line with last Thursday's closing levels. This might not have been the case if not for today's Fed speakers--several of whom reiterated dovish messages about being able to cut sooner rather than later. Other comments reiterated the notion that tariff-driven inflation should start to show up in next week's data (further increasing the stakes for CPI). The Treasury auction wasn't especially strong, but we occasionally see bonds improve simply because the auction cycle is over for any given week. While this isn't a big move, one could argue that it also helped the afternoon mini-rally.
Econ Data / Events
Jobless Claims
227k vs 235k f'cast, 232k prev
Continued Claims
1965k vs 1980k f'cast, 1955k prev
Market Movement Recap
08:39 AM MBS are down an eighth and 10yr yields are up 1bp at 4.345.
01:03 PM Pretty boring 30yr bond auction. Sideways at weaker levels with MBS down 6 ticks (.19) and 10yr up 2.9bps at 4.365
02:30 PM Decent little bounce after Waller comments. MBS down just over an eighth and 10yr up less than 1bp at 4.344
05:05 PM Modestly weaker at the close, but broadly sideways on the week. MBS down 5 ticks (.16) and 10yr up 1.1bps at 4.347 |
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| Mortgage Rates Broadly Sideways | Thu, 10 Jul 2025 20:49:00 GMT
| | Most of this week's mortgage rate movement has been an aftershock following last week's jobs report. That data sent rates quickly higher and that momentum has gradually faded over the past few days. In fact, yesterday finally saw an improvement. Now today, things are minimally changed, depending on the lender. Most lenders issued at least one mid-day change yesterday as the bond market improved. Those lenders are sideways to slightly higher today, but not enough for the average loan quote to be detectably different from yesterday. In a slightly broader context, rates are essentially sideways since Monday. In fact, our daily rate index is currently exactly where it was on Monday afternoon. In addition to being the least exciting outcome, it's also probably the most logical, given the absence of big-ticket news and economic data this week. Next week is a different story with the release of hotly anticipated inflation reports. |
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| Hedging, Fraud Protection, QC Products; FHA, USDA Program Changes; Interview With Pennymac's Kim Nichols | Thu, 10 Jul 2025 15:46:56 GMT
| | Lenders and servicers have entire sets of policies and procedures based on the Federal Emergency Management Agency (FEMA) declaring an emergency in a given area. President Trump says FEMA should be eliminated, which would definitely impact this process. Texas officials weren’t fans of FEMA until they needed it. Unfortunately, FEMA has become politicized. Generally, how does politics work, regardless of political party? President Trump’s spending bill passage was in trouble, and it needed Alaska Senator Murkowski’s vote. And that is how 150 Eskimo whalers saw a fivefold increase in the amount they claim in expenses against tax every year, and the subsidy for Alaska’s rural hospitals was doubled from $25 billion to $50 billion. Meanwhile, professional poker players and sports bettors are demanding a change to the massive tax and spending bill since it changed the way gamblers deduct their losses on their taxes. Currently, gambling winnings can be offset by 100 percent of gambling losses. But the deduction will be lowered to 90 percent of losses in the new bill, which professional gamblers and tax professionals say could lead to taxes on income that gamblers did not earn. So “if they won $100,000 and lost $100,000, they still owe money on the $10,000” because only $90,000 can now be deducted, said Rep. Dina Titus, a Democrat representing Las Vegas who introduced a bill this week to reverse the tax change. (Today’s podcast can be found here and this week’s is sponsored by Truework, the only all-in-one, automated VOIEA platform that helps mortgage providers achieve up to 50 percent cost savings with an industry leading 75 percent completion rate. Today’s has an interview with Pennymac’s Kim Nichols on the current state of the broker channel, market dynamics, and strategies shaping the future of third-party origination.) |
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| Week's Only Relevant Data is Not Bond-Friendly | Thu, 10 Jul 2025 15:33:44 GMT
| | You would be hard pressed to find a week with less to offer in terms of scheduled economic data. In fact, it's not an overstatement to say that regular old weekly jobless claims data was the only relevant report of the week. Unfortunately for fans of low rates, it's not showing any signs of cracks in the labor market (227k vs 235k f'cast). Continuing Claims, while still elevated, also managed to remain below the longer term highs from 3 weeks ago. There hasn't been a huge reaction in the bond market, but perhaps enough to say that we're now in modestly weaker territory instead of being closer to unchanged. |
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| Correction to the Correction. Will it Last? | Wed, 09 Jul 2025 20:30:01 GMT
| | Correction to the Correction. Will it Last?
Hindsight is 20/20 and foresight may have been close enough this week given the classic correction to June's rally giving way to a classic correction of that correction as early as Tuesday afternoon. It wasn't really until Wednesday that bond traders really showed their cards, buying early and often--well in advance of the afternoon's 10yr Treasury auction or Fed Minutes. In fact, it's not clear that either of those events were necessary to today's victory although the auction certainly had a more measurable impact. Data remains scarce on Thursday and foresight gets cloudy again. In other words, anything that was remotely foreseeable has now run its course as we wait to see how narrow the likely-sideways range will be between now and next week's CPI data.
Econ Data / Events
Refi Apps
829.3 vs 759.7
Purchase Apps
180.9 vs 165.3
Market Movement Recap
09:38 AM Consistent buying starting right at the 8:20am CME open. 10yr now down 3 bps at 4.38 and MBS up 2 ticks (.06)
12:25 PM MBS at best levels, up 5 ticks (.16) and 10yr down almost 4bps at 4.371
01:10 PM Very decent 10yr auction and some more improvement. 10yr yield down 5bps at 4.357 and MBS up 6 ticks (.19).
02:11 PM Modest improvement after Fed minutes. MBS up 6 ticks (.19) and 10yr down 6.3bps at 4.343
04:15 PM Heading out at best levels with MBS up almost a quarter point and 10yr down 6.5bps at 4.341 |
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| Mortgage Rate Losing Streak Ends With Moderate Victory | Wed, 09 Jul 2025 19:35:00 GMT
| | It's a bit of a stretch to refer to the past week as a "losing streak" for mortgage rates. The worst part about it was the consistency of upward movement starting last Wednesday. In terms of the size of that movement, things have been less traumatic considering the average lender was still at the lowest levels since early April with the exception of the past 2 weeks. Perhaps it would be better-described as a "non-winning streak." In any event, it's over. The underlying bond market was already showing signs that it was tired of pushing rates higher by yesterday afternoon. Now today, it's clear. Bonds moved into stronger territory early and kept improving throughout the trading session (stronger bonds = lower rates, all else equal). The change erases all of yesterday's damage and a bit of Monday's as well. Despite the improvement today, be aware that there is never a guarantee about the future when it comes to potential shifts in rate trends. An optimist might conclude that bond traders recognized a buying opportunity after this little push toward higher yields, but it will ultimately require rate-friendly economic data next week to solidify the positive message. Conversely, if the data is un-friendly, it could spark another "non-winning streak," or worse. |
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| Bonds Sticking to Predictable Script So Far This Week | Wed, 09 Jul 2025 14:09:55 GMT
| | Anyone who's spent much time around MBS Live knows about our favorite mantra regarding predictions. Specifically, they are for suckers--at least in the context of predicting future interest rate movement. Occasionally, though, there are conditions that result in somewhat reliable patterns or "paths of least resistance."
Any time the bond market has been rallying with regularity--especially when we see several successive days at the lowest yields in many weeks--and then encounters a big data flash point that prompts a sell-off (like last week's jobs report), the path of least resistance is to undergo a bit of a correction. Subsequently, that correction tends to show signs of leveling-off, as we noted yesterday afternoon. From there, the path of least resistance is a broadly sideways range trade as we wait for more meaningful data/events to make a case for a breakout.
Today's supply of such events is still light even though it includes Fed Minutes and a 10yr Treasury auction (we don't see either being up to the task of stoking any sort of large or sustainable momentum). |
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| Big Jump in Mortgage Demand, But Rates Are Already Rising Again | Wed, 09 Jul 2025 13:17:00 GMT
| | Mortgage application activity bounced higher last week following a drop in rates to the lowest levels in 3 months. The Mortgage Bankers Association’s (MBA) weekly survey showed a 9.4% increase in the seasonally adjusted Composite Index for the week ending July 4, 2025. The results included an adjustment for the July 4th holiday. “Mortgage rates moved lower last week, with the 30-year fixed rate decreasing to 6.77 percent, its lowest level in three months,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “After adjusting for the July 4th holiday, purchase applications increased to the highest level of activity since February 2023 and remained above year-ago levels. Homebuyer demand is being fueled by increasing housing inventory and moderating home-price growth.” Refinance applications were up 9% from the previous week and are now 56% higher than the same week last year, with VA refinances jumping 32%. Purchase applications rose 9% on a seasonally adjusted basis and are now 25% higher than last year. The average loan size for purchase apps dropped to $432,600, the lowest since January. The average 30-year fixed rate fell to 6.77% while most point levels shifted only modestly. Jumbo rates posted a larger drop, but points increased more noticeably. Mortgage Rate Summary:
30yr Fixed: 6.77% (−0.02) | Points: 0.62 (unch)
15yr Fixed: 6.04% (−0.02) | Points: 0.63 (−0.04)
Jumbo 30yr: 6.69% (−0.09) | Points: 0.65 (+0.25)
FHA: 6.51% (−0.02) | Points: 0.80 (+0.04)
5/1 ARM: 6.01% (+0.02) | Points: 0.73 (+0.13) |
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| Pulte's Vantage Score Comments Leave Mortgage Market Guessing | Wed, 09 Jul 2025 12:33:00 GMT
| | If you think that everything is great in the U.S. economy, maybe it’s not. At least in New Jersey. While many residents are frolicking on the Jersey Shore, Toms River schools, one of New Jersey’s largest districts, voted to file for Chapter 9 bankruptcy after refusing to raise property taxes another 12.9 percent. This comes after last year’s 9.3 percent increase, totaling a crushing 22 percent hike over two years for homeowners. When you talk about affordability or the Fed controlling inflation, think about issues like this. State officials had ordered the district to either pass this budget or shut down all programs immediately. Over seven years, New Jersey’s school funding changes slashed $175 million from Toms River’s budget. Residents already pay some of America’s highest property taxes, with schools consuming over 50 percent of local tax bills in many towns. Meanwhile, multimillion-dollar home sales in NJ will be subject to a tax under the New Jersey “mansion tax” as part of a new bill that was passed in tandem with the state's $58.78 billion fiscal year 2026 budget. Taking effect on July 10, this new bill shifts the burden of the mansion tax, as well as the state's controlling interest transfer tax for commercial properties, from property buyers to sellers. It also maintains the original 1 percent fee for home sales worth $1 million to $2 million, but now also implements higher fees for increasingly expensive properties. It seems everything is going up in cost. |
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| Correction Starting to Level Off? | Tue, 08 Jul 2025 19:44:20 GMT
| | Correction Starting to Level Off?
Even though very little changed during the course of the trading day, one potentially important thing happened. Rather than start weaker and continue to lose ground throughout the session, bonds managed to stop the bleeding early and then push back toward unchanged levels by the end of the day. This is the kind of thing typically seen when a corrective trend is running out of steam in the short term. While this doesn't make the bond market immune from another motivation to sell, it suggests that the market is now open to suggestion from either bulls or bears, and that's an upgrade from the selling bias seen on Monday.
Market Movement Recap
10:04 AM Moderately weaker overnight with some additional selling early. MBS down an eighth and 10yr up 3.8bps at 4.419
01:36 PM sideways all day. MBS still down an eighth and 10yr up 2.1bps at 3.877
03:33 PM Very slight recovery, but very low volatility. MBS down 3 ticks (.09) and 10yr up 1.3bps at 3.869 |
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